Immovable Security: Lien Eligibility for Mobile Structures
April 2023 - 3 min read
The Ontario Superior Court of Justice confirmed that portable classrooms are characterized as "improvements" and are therefore eligible for a lien under the Ontario Construction Act. The same conclusion would likely be reached in other Canadian provinces and territories.
In Alberta, a structure is eligible for a lien if it qualifies as an "improvement" under the Prompt Payment and Construction Lien Act. Determining exactly what work may be eligible for a lien can be tricky, especially when the product is mobile.
What happens when a structure that is technically mobile improves the value of the land? Are those structures eligible for liens? The Ontario Superior Court of Justice recently shed light on these issues while considering whether portables were eligible for a lien.
While the definition of "improvement" differs in Alberta vs. Ontario, the relevant Alberta provision is broader and captures more. The applicable provisions are outlined below.
"improvement" means anything constructed, erected, built, placed, dug or drilled, or intended to be constructed, erected, built, placed, dug or drilled, on or in land except a thing that is neither affixed to the land nor intended to be or become part of the land
Section 1(1) "improvement means, in respect of any land, (a) any alteration, addition or capital repair to the land,
(b) any construction, erection or installation on the land, including the installation of industrial, mechanical, electrical or other equipment on the land or on any building, structure or works on the land that is essential to the normal or intended use of the land, building, structure or works, or
(c) the complete or partial demolition or removal of any building, structure or works on the land
Can Portable Structures Be Liened?
The School Board hired Ty Corporation to build portables for one of its schools to accommodate an anticipated influx of students in the upcoming school year. Ty Corporation subcontracted OnPoint. Despite not being contemplated under the contract, the School Board retained a roughly 10% holdback.
OnPoint knew the destination of their portables before completing construction. OnPoint built portions off-site but finished the work at the school site. The Court noted the following relevant traits of these portables:
- They contained one classroom.
- They had floors, walls, windows, stairs, and ceilings.
- Stilts were placed underground to create wind-resistance
- They had electricity, heating, Wi-Fi, air ventilation systems, insulation, stairs, lighting systems, blackboards/whiteboards, and storage space.
- They did not have bathrooms or running water.
After completing the project, OnPoint registered a lien on the school property for the value of its work. The School Board challenged the lien, claiming that the portables did not qualify as "improvements."
The Court decided that the portables were "improvements"; therefore, the lien was valid.
The Court first interpreted the meaning of "improvements." It concluded that an "improvement" is anything essential to the property's normal or intended use and increases its value. When deciding if the portables were "improvements," the Court assessed the level of their integration into the existing land, whether they were marketed as portable, and the parties' intention to the contract.
The Court considered the 10% holdback as exceptionally probative. Although not contemplated under the contract, the School Board conducted itself in a manner consistent with contracting for work capable of being subject to a lien by claiming this holdback.
The Court then considered how the portables were built and how they would be removed. Construction required significant materials, machinery, and labour power, and so would their removal. Although technically mobile, the portables were specifically built for the school site.
The mobile nature of the portables was not determinative on its own to decide that they were not "improvements," as virtually all structures can be moved using modern engineering techniques. Accordingly, the Court viewed the nature of the project as consistent with an "improvement" to the land.
The portables were built instead of building another school wing. Without the portables, the school could not satisfactorily conduct its business. The Court determined that the portables undoubtedly improved the value of the land.
Applicability in Alberta
Although the definition of "improvement" differs from province to province, the factors considered by the Ontario Court to determine whether a structure is eligible for a lien remain consistent throughout Canada. Courts will look at the work required to build and remove a structure and how integral it is to the value of the land when determining if it is an "improvement."
This case demonstrates that a structure does not need to be immovable to qualify as an "improvement" to the land. Given the time and effort involved in building technically mobile structures like portables, contractors can rest assured that this work is likely lienable.
Determining what is eligible for a lien is a complicated area of law. Contact Anthony Burden or Todd Kathol in Calgary, Ryan Krushelnitzky in Edmonton, or any member of Field Law's Construction Law Group with questions about what work may be lienable.
Link to decision: OnPoint Ltd. v. Conseil des Écoles Catholiques du Centre Est et al., 2023 ONSC 1341